7 th Meeting of The 10 th ASOSAI Research Project Teheran, December 2014 The Audit Board of The Republic of Indonesia

I. Background Audit Board of Indonesia (BPK) Established on January 1947 Main duty (constitution of 1945) “To audit the management and accountability of state finance, there shall be a Supreme Audit Board which shall be free and independent.” Law 15/2004 BPK could conduct investigative audit to reveal any corruption indication and/or state loss Law 15/2004 BPK could be expert witness before the court regarding state loss examination Position in state administration Considerable level of independence, same level with president, parliament, and supreme court Company Logo

II. Evaluation of Current Situation of Fraud and Corruption Serious and Pervasise Abuse of Power and Bribery Law Enforcement, Tax, Procurement Weak and Lack of Anti Corruption System

III. Evaluation of Current Condition of Anti- Corruption In general, Indonesia has an adequate tools to fighting against corruption 1. Indonesia has a National Anti Corruption Strategy, define the strategy to action plan; and has employed all of the measures in fighting against corruption; 2. Indonesia has an Anti Corruption Agency with a comprehensive functions; 3. Indonesia has a strong legal basis to fight against corruption, include a special law for corruption; 4. Indonesia has developed an International Cooperation in fighting against corruption with moderate success level; 5. Indonesia has an intensive efforts to promote awareness in fighting against corruption.

III. Obstacles in Anti-Corruption The biggest obstacles are collusion and a light punishment for fraudster.

PREVENTIVEDETECTIVEREPRESSIVE Optimizing prevention on potential fraud Immediate action to detect fraud conducts when exist Litigation support on prosecution with highly and legally accurate accounting FRAUD Public Information IA Reports Request from Government & House of Reps. Non Investigative Audit Report Investigative AuditBoard initiative 1 st Investigation 2 nd Investigation ProsecutionCourt Corruption Eradicating Comm. General Attorney National Police Supreme Court High Court District Court RECOMMENDATION ON INTERNAL CONTROL Financial Audit Performance Audit Audit for Specific Purpose (non Investigative)‏ IV. Role of Audit to Detect Fraud and Corruption Forensic Audit Expert Witness

IV. Role of Audit to Detect Fraud and Corruption Investigative Audit Methodology Analize available data To Create a Predication Create the hypothesis Worst-Case Scenario Test the hypothesis Audit Technique; Refine and amend the hypothesis. Proved vs Unproved Audit Techniques Document analysis  go substance, not only form! Analytical review Re-performance/re-computation Observation Physical examination Confirmation Interview  2-ears..one-mouth.. s

IV. Role of Audit to Detect Fraud and Corruption Audit Experiences to Detect Fraud and Corruption 1.Hambalang Case (procurement) 2.Century Case (bank bailout) Limitation 1.Organizational (Non existence of Formal Investigative Audit Unit) 2.Lack of Resources (financial, fraud examiner)

V. Typical Audit Practices Preventive Goal: Corruption Prevention 1. E Audit 2. Public Awareness 3. Audit Guidelines and Training on Fraud Awareness Detective Goal: Corruption detection in earlier phase 1.Investigative Audit Manuals 2. Training on Investigative audt Follow Up and Reporting Goal: Quick and precise response by LEA on corruption case 1. MoUs with LEA 2. Expert Witness 3. Training on State Loss Examination and Expert Witness (moot court)

cases USD 49, cases USD9, cases USD13, cases USD24, cases USD 61,897 V.Reporting and Follow Up Role Number of corruption cases submitted to the Law Enforcement Agency

VI. Measures on Improving Audit’s Function in Detecting Fraud and Corruption MoU between/Among SAIs Active Member of INTOSAI, ASOSAI, ASEANSAI Cooperation with Donors (World Bank, USAID) Mandate to do Investigative Audit Collaboration with LEA for combating corruption (ex: MoUs) Indirect role for strengthening Government Anti Corruption Standard (ex: Performance Audit on Gov’t Fraud Control System) Whistleblowing System Investigative Audit Manuals Training on Fraud Awareness and Investigative Audit